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Vol. II.)


(No. 5.

order to justify a court in declaring that Congress has transcended its authority in enacting them. In our opinion Congress has the power to make any provisions which tend to promote the efficiency of these banks in performing the functions by which they were designed to serve the government, and to protect them, not only against interfering state legislation, but also against suits or proceedings in state courts by which that efficiency would be impaired. We are unable to perceive that the provisions here assailed are not of that character, and therefore cannot pronounce them void.

Judgment affirmed.


[OCTOBER, 1874.]

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USED IN § 110 OF THE ACT OF JULY 13, 1866.


The term “capital,” employed by a banker in the business of banking, in the 110th

section of the revenue act of July 13, 1866, does not include moneys borrowed by him from time to time temporarily in the ordinary course of his business. It applies only to the property or inoneys of the banker set apart from other uses and permanently invested in the business.

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MR. JUSTICE FIELD delivered the opinion of the court.

The one hundred and tenth section of the revenue act of the United States, as amended on the thirteenth of July, 1866, 14 Stat. at Large, 136, enacts, “ that there shall be levied, collected, and paid, a tax of one twenty-fourth of one per centum each month .. • upon the capital of any bank, association, company, or corporation, and on the capital employed by any person in the business of banking beyond the average amount invested in United States bonds.” And the seventy-ninth section of the same act as amended declares, " that every incorporated or other bank, and every person, firm, or company having a place of business where credits are opened by the deposit or collection of money or currency, subject to be paid or remitted upon draft, check, or order; or where money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes ; or where stocks, bonds, bullion, bills of exchange, or promissory notes are received for discount or for sale, shall be regarded as a bank or as a banker." 14 Stat. at Large, 115.

During the years 1869 and 1870, the plaintiffs were bankers within the meaning of this statute, doing business in the city of New York, under the name of Clark, Dodge & Company; and at various times between the first of April, 1869, and the first of February, 1870, they made returns, as required by law, to the assessor of internal revenue for the district, of the amount of their fixed capital employed in banking, and of the amount of moneys deposited with them by their customers. The

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(No. 5.

assessor required more than this: he insisted, against the objection of the plaintiffs, that all moneys borrowed by them from time to time, and temporarily in the ordinary course of their business, formed a part of their capital employed in the business of banking, and were subject to the tax imposed upon capital, under the section cited. He accordingly assessed a tax upon the several amounts thus borrowed within the dates mentioned, as part of the capital of the company.

The defendant was at the time collector of internal revenue in the district, and as such officer enforced the payment of the taxes thus assessed, amounting to over six thousand dollars. The plaintiffs protested at the time against the legality of the assessment, and appealed from the decision of the assessor to the commissioner of internal revenue. Failing to obtain any rescission of the assessment or restitution of the moneys paid, they brought the present action for their recovery.

The action was tried by the court without the intervention of a jury, by stipulation of the parties, under the recent act of Congress. The court found the facts we have stated, but with greater fulness of detail, and held that the moneys thus temporarily borrowed by the plaintiffs in the ordinary course of their business was not capital of the company employed in the business of banking, and was not, therefore, liable to assessment as part of such capital; and that the assessment and collection of the tax was, therefore, illegal and unauthorized. The court accordingly gave judgment for the plaintiffs. To review that judgment, the case is brought here on writ of error.

As appears from this statement of the case the only question for determination relates to the meaning to be given to the term capital in the one hundred and tenth section of the revenue act. The term is not there used in any technical sense, but in its natural and ordinary signification. And it is capital not merely of individuals, but of corporations and associations, which is subject to the tax in question. When used with respect to the property of a corporation or association, the term has a settled meaning; it applies only to the property or means contributed by the stockholders as the fund or basis for the business or enterprise for which the corporation or association was formed. As to them, the term does not embrace temporary loans, though the moneys borrowed be directly appropriated in their business or undertakings. And when used with respect to the property of individuals in any particular business, the term has substantially the same import; it then means the property taken from other investments or uses and set apart for and invested in the special business, and in the increase, proceeds, or earnings of which property beyond expenditures incurred in its use consists the profits made in the busi

It does not, any more than when used with respect to corporations, embrace temporary loans made in the regular course of business. As very justly observed by the circuit judge, “it would not satisfy the demands of common honesty if a man engaged in business of any kind, being asked the amount of capital employed in his business, should include in his reply all the sums which, in the conduct of his business, he had borrowed and had not yet repaid.'

There is no difference in the business of banking as conducted by indi. viduals from the business as conducted by corporations, which would

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Vol. II.)


(No. 5.

warrant any different meaning to be given to the term capital in the two cases. Nor can any good reason be stated why a distinction should be made between banking corporations and individual bankers in this respect.

Independently of these considerations there would be great practical difficulty in administering the law upon the theory that moneys temporarily borrowed are to be treated as capital and taxable as such. The amounts borrowed from time to time must necessarily vary, and, if they are treated as additions to the capital, the aggregate amount of the capital must be constantly changing. It would, therefore, be necessary for the assessors of the government, in order to determine the capital to be taxed every month, to average the sums borrowed, and in adopting any such course they would be obliged to interpolate into the statute the word average, which was stricken out by the amendment of 1866.

We are satisfied that the term as used in the statute was intended to embrace only the fixed capital employed in the business of banking, as distinguished from deposits and temporary loans made in the regular course of business, and that no distinction is to be made in this

respect between the capital of individual bankers and that of banking corporations.

It is undoubtedly true, as stated by the attorney general, that capital used in the business of banking is none the less so because it is borrowed. The mere fact that the money permanently invested in the business is borrowed does not alter its character as capital. The question here is whether money not thus permanently invested, but borrowed temporarily in the ordinary course of business to meet an emergency, is capital; and we are clear that the term does not, either in common acceptation or within the meaning of the statute, embrace loans of that character.

After controversies had arisen as to the interpretation to be given to the statute upon the question at issue in this case between bankers and the government, Congress passed the Act of 1872, defining the meaning of the terms “capital employed,” in the one hundred and tenth section, and enacted that they “ shall not include money borrowed or received from day to day in the usual course of business from any person not a partner of, or interested in, the said bank, association, or firm.” 17 Stat. at Large, 256. This enactment was evidently intended to remove any doubt previously existing as to the meaning of the statute and declare its true construction and meaning. Had it been intended to apply only to cases subsequently arising it would undoubtedly have so provided in terms.

Judgment affirmed.

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1. During the war neither the law of the United States, nor any policy of their govern

ment, was in force in any part of the Confederate States, not in the possession or

under the control of the United States. 2. On the 1st of February, 1865, B., representing himself to be the agent of the Confed

erate States government, to take tobacco into Maryland and exchange it for bacon, applied to D., living near the Potomac River in W. County, to store for him in D.'s barn for the night eighty-four boxes of tobacco. D. being unwilling to do it, B. agreed with him that if he would receive the tobacco in his barn, and should sustain any damage or injury from the forces of the United States in consequence of the tobacco being there deposited, B. would make good all losses he might sustain thereby. Under this agreement the tobacco was deposited in D.’s barn, where it remained until the 17th of March, B. undertaking to pay for any loss D. might sustain thereby. At that time the enemy's gun-boats on the river approaching D.'s "house he removed and concealed the tobacco, and his houses and out-buildings and furniture were destroyed by the enemy :

his loss amounting to $6,352. Held : (1.) B. being the agent of the Confederate government, which could enforce obedience

upon all within its jurisdiction, the contract was valid, and B. is bound to pay D. for

the loss which he sustained. (2.) If B. was not the agent of the Confederate government, and was prosecuting a private

enterprise, against the laws and policy of that government, D. is not particeps criminis

with B., in an equal degree, if at all, and he is entitled to recover. (3.) To make a contract unlawful as being against public policy or law, it must be mani

festly and directly so; and it is not enough that the contract is connected with some violation of the law, however remotely or indirectly.

This is a writ of error to a judgment of the late district court held at Fredericksburg, affirming a judgment of the circuit court of Essex County, rendered in favor of the defendant in error, the plaintiff in the said circuit court, William R. Dozier, against the plaintiffs in error, the defendants in the said circuit court, B. Bier and S. Mann, who, with Samuel Strooke and L. Bowman composed a partnership firm, trading in the name and style of S. Strooke & Co. The action was in assumpit. The declaration contained two counts, and was in substance as follows: The first count stated that the defendants, on the first day of February, 1865, at the county of Westmoreland, in consideration that the plaintiff, at the special instance and request of the defendants, would receive on storage upon his premises, to wit, in his barn, and take care of a large lot of tobacco, the property of the defendants, for their use and at their risk, for a short time, to wit, for the space of forty-eight hours, undertook and promised that they, the defendants, would make good to the plaintiff, and pay him for all loss and damage done to him or to his property by the army of the United States, or any person or persons in the employment of the United States, by reason of said tobacco having been stored upon the said premises, it having been admitted by the defendants that the said tobacco was intended to be transported from

Vol. II.)

BIER v. Dozier.

(No. 5.

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said premises into the State of Maryland, and that such transportation was forbidden by the government of the United States: That the plaintiff, confiding in said promise and undertaking of the defendants, did then and there receive on storage upon his premises, to wit, in his barn, the said tobacco, and did take care of the same, and afterwards safely deliver it to the defendants: That the defendants did not regard their said promise and undertaking, but deceived the plaintiff in this, to wit, that the said tobacco was permitted to remain upon the premises for a long space of time, to wit, for the space of three months, and until the officers and men on the United States gun-boats and vessels of war on the Potomac River had been informed of the fact that said tobacco was so stored upon the premises of the plaintiff ; and coming in search of the same upon said premises, and failing to find it, by reason of the care and attention of the plaintiff in concealing it, they, the said officers and men, did great damage to the property of the plaintiff

, by burning his dwelling-house, furniture, stable, grain, and other property in and upon the said premises, whereby he was put to great expense and loss, &c., in the whole amounting to a large sum of money, to wit, to the sum of $6,352. The second count stated that on, &c., at, &c., in consideration that the plaintiff, at the like special instance, &c., would receive into his possession, upon

his premises, in said county of Westmoreland, a large and very valuable lot of tobacco, the property of the defendants, which they were attempting to carry to Maryland for sale, they, the defendants, undertook and promised the plaintiff that they would pay to him any damage or loss sustained by him at the hands of the United States forces, by reason of said tobacco being put into the possession and upon the premises of the plaintiff by the defendants : That the plaintiff did so receive said tobacco into his possession and upon his premises, upon the conditions aforesaid ; and that the United States forces did, having sought for said tobacco and failing to find it, burn and destroy the houses, furniture, and other property of the plaintiff, of great value, to wit, of the value of $6,352 ; of which the defendants afterwards, to wit, on the 10th day of May 1865, at, &c., were duly informed: And that the defendants failed and refused to pay the loss and damage sustained by the burning and destruction aforesaid. Wherefore, the plaintiff said that he was injured and had sustained damage to the amount of $ There was, at the conclusion of both counts, a statement apparently applicable to each, that afterwards, to wit, on the 10th day of May, 1865, in consideration of the premises respectively, the defendants promised to pay the said several sums of money, on request, to the plaintiff ; yet they had not paid the same, or any part thereof, “ to the plaintiff's damage $12,000; and thereupon he brings suit,” &c.

The defendants filed a general demurrer to the declaration, and the plaintiff joined in the demurrer; which, upon argument, was overruled. And then the defendants plead not guilty to the first count, non-assumpit to the second, and filed a special plea that they were not partners, as alleged in the declaration. To all these pleas the plaintiff replied generally; and issues being thus joined by the parties, were tried by a jury, which found a verdict for the plaintiff on all the issues, and assessed his damages at $5,937, with interest thereon from the 17th day of March, 1865, till paid ; and judgment was rendered accordingly.


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